Dear Vice President Biden (can I still call you Joe?):
First of all, I want to offer my apologies for writing such a long letter the other night. It was late and, frankly, I just wanted to get some things off my chest.
More importantly, however, I feel obligated to tell you that I made a mistake in my letter to you. You see, in that letter about Risk Aversion, it stated:
…I heard just the other day that businesses are sitting on about $1.4 trillion right now and they don’t want to put it into the economy because you’ve got them scared, Joe. They’re risk averse.
That was wrong, Joe, and I apologize. You see, apparently businesses are not sitting on $1.4 trillion. They’re sitting on $1.8 trillion. That’s a $400 billion difference and really not something that should have been overlooked. As the Washington Post notes this morning:
The Federal Reserve recently reported that America’s 500 largest nonfinancial companies have accumulated an astonishing $1.8 trillion of cash on their balance sheets. By any calculation (for example, as a percentage of assets), this is higher than it has been in almost half a century. Yet most corporations are not spending this money on new plants, equipment or workers. Were they to loosen their purse strings, hundreds of billions of dollars would start pouring through the economy. These investments would probably have greater effect and staying power than a government stimulus.
But then, Joe, the Post kind of confirms what I said the other night (but in a far more eloquent way).
The key to a sustainable recovery and robust economic growth is to get companies investing in America. So why are they reluctant, despite having mounds of cash? I put this question to a series of business leaders, all of whom were expansive on the topic yet did not want to be quoted by name, for fear of offending people in Washington.
Economic uncertainty was the primary cause of their caution. “We’ve just been through a tsunami and that produces caution,” one told me. But in addition to economics, they kept talking about politics, about the uncertainty surrounding regulations and taxes. Some have even begun to speak out publicly. Jeffrey Immelt, chief executive of General Electric, complained Friday that government was not in sync with entrepreneurs. The Business Roundtable, which had supported the Obama administration, has begun to complain about the myriad laws and regulations being cooked up in Washington.
One CEO told me, “Almost every agency we deal with has announced some expansion of its authority, which naturally makes me concerned about what’s in store for us for the future.” Another pointed out that between the health-care bill, financial reform and possibly cap-and-trade, his company had lawyers working day and night to figure out the implications of all these new regulations.
Most of the business leaders I spoke to had voted for Barack Obama. They still admire him. Those who had met him thought he was unusually smart. But all think he is, at his core, anti-business. When I asked for specifics, they pointed to the fact that Obama has no business executives in his Cabinet, that he rarely consults with CEOs (except for photo ops), that he has almost no private-sector experience, that he’s made clear he thinks government and nonprofit work are superior to the private sector. It all added up to a profound sense of distrust.
Geez, Joe! When you have CEOs saying you’re anti-business and they don’t trust you…well, that’s sort like saying you’ve got the clap, man! Ain’t nobody gonna touch that!
Now that, Joe, is “a big f**king deal!“…It’s the ultimate “Risk Aversion.”
Joe, far be it for me or anyone else to try to teach you and the fine folks [cough] in DC common sense. I mean, really, so long as you’re happy with the way things are, who are we to point out the obvious? But, seriously, if you want to get the economy going again and have people employed, you’ve got to get government out of the way.
Until next time, Joe.
“I bring reason to your ears, and, in language as plain as ABC, hold up truth to your eyes.”Thomas Paine, December 23, 1776
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